Starling Bank Debuts ‘Scam Intelligence’ as APP Fraud Grows

Starling Bank says it has begun using AI to help customers ward off purchase scams.

The lender’s latest product, dubbed “Scam Intelligence,” marks the first time a British bank has offered an artificial intelligence (AI)-powered scam detection tool in its app, Starling announced Tuesday (Oct. 28).

“With Scam Intelligence, Starling customers can better protect themselves from scams, and learn more about the warning signs too,” Harriet Rees, chief information officer at Starling, said in a news release. “Knowledge is power when it comes to managing and protecting your money, and we believe AI is giving our customers exactly that.”

According to the release, the tool lets the bank’s personal, joint and business account customers upload images of items and ads from online marketplaces, and analyze them for signs of fraud before offering personalized guidance.

For example, if a customer wants to purchase a bike from Facebook Marketplace, Scam Intelligence might tell them if the price is too good to be true, or if the image in the ad isn’t genuine, or the bank account information doesn’t match the seller’s details.

“Similarly, if customers receive requests to transfer money before seeing an item in person, Starling’s tool could detect pressure and urgency tactics,” the release added.

The release notes that fraud cost the UK $1.5 billion last year, nearly half of it coming from authorized push payment (APP) fraud, where victims unwittingly approve payments to scammers. Starling hopes that Scam Intelligence can reduce instances of APP fraud by warning customers against specific indicators of scams and informing them about what to look out for in future transactions.

The announcement comes days after the financial services industry trade group UK Finance released findings showing that APP fraud had contributed to an increase in losses to payment fraud and scams during the first half of the year in the U.K.

Losses from APP fraud climbed 12% year over year to reach 257.5 million pounds (about $342.5 million) during that period, while losses from unauthorized transactions across payment cards, remote banking and checks fell 3% to 372 million pounds (or around $494 million).

“Despite the ongoing investment and prevention measures by the industry, the majority of fraud originates outside the banking system, online and over the phone, where manipulation begins long before any payment is made,” Ben Donaldson, managing director of economic crime at UK Finance, said in a news release.

Meanwhile, the PYMNTS Intelligence and The Clearing House collaboration “Reality Check: Fact vs. Fiction in Real-Time Payments Fraud” found that APP fraud is a top concern among banks when it comes to instant payments, second only to account takeover fraud.

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